Daimler posts forecast-beating results as demand rebounds
FRANKFURT (Reuters) - Daimler DAIGn.DE shares surged 4.5% on Friday after the luxury carmaker posted forecast-beating third-quarter results, buoyed by a better-than-expected rebound in sales of luxury cars in September.
European car registrations rose slightly in September, the first increase this year, industry data showed on Friday, suggesting a recovery in the auto sector in some European markets where coronavirus infections were lower.
Swedish truckmaker AB Volvo VOLVb.ST also posted third-quarter core earnings well above forecasts thanks to a healthy jump in orders.
Daimler’s third-quarter earnings before interest and tax reached 3.07 billion euros ($3.59 billion), it said late on Thursday, beating the 2.14 billion euro Refinitiv consensus.
The Stuttgart-based company is due to publish further financial details on Oct. 23 and said it will publish updated guidance for the full year at that time.
Analysts had expected premium carmakers to benefit from a rebound in demand, and welcomed Daimler’s strong cashflow during the quarter.
“Free cashflow beat is a solid surprise,” Philippe Houchois, an analyst at Jefferies, said in a note.
Daimler said it expected the positive momentum to continue in the fourth quarter, assuming there are no further coronavirus lockdowns.
The COVID-19 pandemic had led to a slump in sales, pushing the company to operating losses in the first and second quarters.
To counter losses, Daimler's Mercedes-Benz has stopped building sedans in the United States to focus on more profitable SUVs, combined its fuel cell development with Volvo Trucks, and halted an automated development alliance with BMW BMWG.DE.
Earlier this month, Daimler said it will cut fixed costs, capex and research and development spending at Mercedes-Benz by more than 20% by 2025 as part of a strategy overhaul to take the brand further upmarket.
The move will see Mercedes-Benz, currently the world’s top selling premium car brand, turn its back on a decades-old strategy of chasing sales volume to focus on the industry’s most profitable segments: limousines and sport-utility vehicles.
Reporting by Christoph Steitz and Emma Thomasson; Editing by Chris Reese and Tom Brown and Kirsten Donovan